Boys Markets--the 54-store Los Angeles supermarket chain built on catering to Southern California's burgeoning minority communities--said Tuesday that it has received a $130.7-million takeover offer, reportedly from a wealthy Mexican family.
The announcement comes as the Los Angeles supermarket industry is being shaken by a round of takeovers and mergers. Ralphs has been put up for sale by its parent company, Federated Department Stores, which is fighting a takeover battle of its own against Canadian developer Campeau Corp. In December, Vons Cos. said it had agreed to buy Safeway supermarkets in Southern California.
In a brief announcement, Boys said it is negotiating with a suitor who had made an offer of $12.50 for each of the company's 10.46 million shares. Boys stock closed at $11, up $2.25, in over-the-counter trading.
"It's a very reasonable price," said Su Moon Paik, an analyst at L. H. Alton, a San Francisco brokerage. Paik expected a definitive agreement to be signed within a few days. She noted that the company issued stock to the public only last May. "It's been a pretty short-lived public company," she said.
Would Retain Management
A $130.7-million sale would seem to reward the owners of Boys. Riordan Freeman & Spogli, a Los Angeles merchant banking firm, and Boys management purchased Boys in April, 1986, for about $83 million and then paid $16 million to buy and convert eight Food Co. Markets.
Analysts surmised that a sale of Boys would help Riordan Freeman to raise funds for a purchase of Ralphs. The firm reportedly is interested in backing a buyout bid by Ralphs Chairman Byron Allumbaugh.
Although Boys executives would not disclose the identity of the bidder, a source close to Boys said the potential buyer is the Brenner family of Mexico.
The source said the family has indicated that it wants to retain Boys' current management. "We feel it's going to be in excellent hands," the source said.
This is not the first time the Brenner family has shown an interest in the U.S. supermarket industry. About two years ago, the family attempted--and failed--to go into business with Houston-based Fiesta supermarkets, which caters primarily to Latino shoppers.
The family is reportedly headed by Don Pablo Brenner. His two sons, Alfredo and Gabriel, work in the Century City office of Macro Distribution Corp., a family-owned business. The family also is said to control firms that own the Camino Real hotel chain, Mexico's largest, and also has interests in the Mexican food industry.
None of the Brenner family members were available for comment.
Boys, founded in 1924, has 54 supermarkets and one drugstore in the metropolitan Los Angeles area.
The chain has built its fortune on catering to Los Angeles' many minority communities. The Boys stores in predominantly black Watts offer a variety of pork products and black-eyed peas in bulk, while a store in Latino Huntington Park features 25-pound sacks of masa harina (a flour used to make tortillas) and pinatas (a colorful paper doll filled with candy). In all, 80% of the Boys stores are in predominantly minority neighborhoods.
Although Boys has been hailed for remaining in minority neighborhoods after other supermarkets have left, the chain has been criticized for charging high prices. The California Public Interest Research Group, a consumer rights group, found that Boys had the highest overall prices in a survey of eight supermarket chains conducted last July.
For the first nine months of 1987, Boys earned $7.1 million on sales of $407.8 million. Full-year results are not expected to be released until next week.